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Home > Business & Careers > Accounting   »   What is the company's contribution margin ratio?

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Old Mar 19, 2008, 07:35 PM
Noelle24
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What is the company's contribution margin ratio?
What is the company's contribution margin ratio?

Sales $1,200,000
Variable expenses 800,000
Contribution margin 400,000
Fixed expenses 300,000
Net operating income $100,000



sold 20000 units

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Old Mar 20, 2008, 10:20 PM   #2  
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A contribution margin ratio is just the contribution margin as a percent of sales. And to find what percent one thing is of another, you always divide in that order.

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Old Mar 22, 2008, 04:52 PM   #3  
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Contribution Margin Ratio = Contribution Margin / Total Sales

Contribution Margin = Sales – Variable Cost

CM Ratio = 400,000 / 1,200,000
CM Ratio = 33.33%
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